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the week that was because it's friday data centers and your electricity bill and a bus ride too and we'll do it in that order from american public media this is marketplace in los angeles i'm carl brisdahl it is friday today july the 10th good as it always is to have you along, everybody. We are, to be honest, a little squeezed today. The show's only half an hour, you know. So we're going to dig right into that Friday thing that we do. Heather Long is at Navy Federal. David Gura is at Bloomberg. Hey, you two. Hey, Kai. Hi, Kai. David Gura, you get to go first. And it goes like this. The Fed Minutes. We had Robin Brooks from Brookings on the program on Wednesday, I guess, when the minutes came out. And Robin said something right at the end, that I had mismanaged our time, so we didn't have enough time to talk about this. He said he thought those minutes were not as hawkish as perhaps everybody else has been reading them. That is to say, not as concerned over interest rates and inflation. And I guess I'd like your take, because I thought they were pretty hawkish. I thought there was some sentiment there on the committee that they're not opposed to thinking about raising interest rates. I would side with

you versus Robin. I mean, we look at those minutes and see that there was some division among policymakers about the approach that they wanted to take at that meeting. And of course, the headline from that last meeting was Kevin Warsh had unanimity among members of the Federal Open Market Committee. They agreed to keep the right where it has been. You know, a lot of ink spilled over that. But I think when you look at those minutes, you see that there is growing concern among a lot of those policymakers about inflation, where it is and where it's headed. And I think that that is shaping up to be the story of this first part of the Kevin Warsh Fed. Yes, we talk a lot about what's happening in the Middle East, but I think there's this roiling concern among policymakers and economists and investors as well that inflation, which was already higher than the Fed wanted it to be, was proving to be a persistent problem, is bleeding beyond just energy and other parts of the economy. So I'm with you. I look at that and maybe you can say Kevin Warsh kept everybody in line. Maybe they gave me the benefit of the doubt, but I do think that there was more concern there than we thought, at least from the get-go. Yeah, roiling concern,

Good phrase. Back to the Middle East in a minute, we shall get, Heather Long. But I do want to touch base on the other news out of the Fed this week. The chairman announced his task forces, the five of them. Some interesting choices, some straight ahead choices. What do you make of these people who would be advising the Fed and maybe changing the way the central bank does business?

Overall, I thought it was good news. It's a lot of smart, credible people who aren't overtly partisan. And, you know, I read it as this was a signal that Kevin Warsh is not doing the bidding of the White House, that he is trying to seriously position the Fed for the future. Now, you can quibble, you know, certainly with a few names here and there, but the bigger problem for Kevin is five is a lot. I don't care how good of a multitasker you are. To have five screens up, you can't pay attention to them all. So it seems to me like, you know, he's getting –

That's a good analogy, five screens.

Yeah, particularly in the FIFA era. But anyway, so I think he's – it's pretty obvious he's going to move quickly on communications and data, potentially looking at some other data. I think the interesting wild card is when I looked at the names on the inflation one, you know, as David was just saying, and this is we're probably going to stay well above the 2% inflation target for a long time. And when you look at the three names on the inflation one, you get a lot of people who are a little contrarian. And, you know, what are they going to say? What are they going to recommend in this world of, you know, we can't get inflation back to target? That could be interesting.

Yeah. David, on the communications thing, I don't know if you saw this, but Christopher Waller, Governor Waller, if you will, came out, I guess he had a speech on Monday where he said, you know what, maybe.

too much forward guidance is a bad thing. So clearly Warsh is having an influence.

Yeah. And this is kind of where we knew he wanted to make a mark. And I think what's interesting about all of these committees, all these task forces is it's kind of putting into effect what we kind of thought Kevin Warsh would want to do. He's not going it alone. You know, you go back to the hearing that he had on Capitol Hill before he was confirmed. We didn't get a whole lot about what his plans are going to be going forward. So we were kind of looking back at speeches he's made in the past, criticisms he made of the Fed in the past. And so I think I want to call them proxies, But but through these task forces, he's going to try to make a stamp in the way in which he is. And, you know, as Heather said, there are a lot of names here that are recognizable. I kind of laughed that a Stanford guy would pick like, I think, a quarter of the Harvard economics department to be on these these committees. But, you know, it's it's it's a wide mix. And, you know, you've got Doug McMillan, who used to head Walmart, Mark Andreessen. There are some who are not, you know, traditional Fed policymaker types. And, you know, maybe that will lead to some sporting conversation, sporting or sporty

conversation um heather to the middle east indirectly if i could um uncertainty now certainly about what's what's happening over there uh political military wise uncertainty in the oil and gas markets and i guess i want to touch base with you on uncertainty in this economy now is everywhere discuss uh yeah it certainly feels that way and i mean you left

thought you could pile onto your list that we have these large federal debt burdens in the United States and many other countries. And, you know, obviously this has all resulted in feels like a daily deluge of headlines that you and David have to get through every day. But, you know, for a lot of people in the real economy, it's borrowing costs are higher. You know, what was really noticeable is, okay, when we sort of got this sort of maybe ceasefire, whatever we're calling it now. You know, oil and gas prices did come down a bit. Obviously, they've jumped around a little bit. But what didn't really come down were the bond market prices. You know, the borrowing costs have stayed high. And that is a direct result of this uncertainty, risky world. It's a new normal. A new abnormal, perhaps. Who knows? David,

last question to you. And it goes like this. Look ahead to the week for me. Would you coming up? lots of data lots of fed speakers we got cpi we got the beige book we got retail sales what's on your radar as you as you head into monday well i think the the 14th of june is

the big date we're going to get new cpi data so some more insight into inflation and that's also the day on which kevin warsh is going to go to capitol hill for the first time as fed share to answer questions so again i think it's just another opportunity one of the first opportunities we have for him to kind of lay out his plans talk about the economy as he sees it uh we got these task forces out of the way. But I think that's what I'm most interested in hearing is

how he sees the economy right now. A primer, by the way, on this program on Humphrey Hawkins coming up Tuesday, I think. David Garra at Bloomberg and Heather Long at Navy Federal. Thanks, you two. Thanks, Kai. Bye, Kai. Wall Street on this Friday. Ain't nothing traders like better than going out on a high note. We will have the details when we do the numbers. There are precious few commodities in the known universe as finely balanced on the supply-demand curve as crude oil. We use give or take 100 million barrels a day. We produce give or take 100 million barrels a day. But there's a whole lot that happens between the wellhead and the final user, which gets us to the prices of refined fuels, gasoline and diesel and jet fuel, that are still way up there, despite crude having moderated quite a bit off its recent high. Refiners in the United States, as it happens, are cashing in. And yes, it does have to do with war, but maybe not the one you have in mind. Marketplace's Elizabeth Trovol has that one.

Recent Ukrainian attacks on Russian refineries are rippling through global energy markets, says Tom Kloza, energy advisor for Gulf Oil. People might think that, you know,

the Russia-Ukraine war has gone off their radar screens, but it's rearing its head in these high

refined products prices. Refinery outages have reached some of the highest levels in Russia since the war started, says Debnel Chowdhury with S&P Global Energy. Now it's greater than 35%

of their refining capacity has come down because of recent attacks in the country.

That's tightening the global supply of fuels and increasing what refiners can charge, while they're also paying less for crude oil. Chowdhury says that means in the U.S.

All major refining markets are north of $40 at this point a barrel, which is very strong margins.

That high margin per barrel is also affected by the Iran war. There's still less refining.

product coming out of the Middle East. And while inventories of crude oil have helped keep those

prices lower. We don't have the same buffer for refined products. The timing here also matters.

Tom's saying is with Texas Christian University. We're at peak summer demand. So you can say that essentially refined products are at a premium. He says gasoline and aviation fuel demand typically drop after Labor Day, which could end the gravy train for refiners. I'm Elizabeth Troval for Marketplace.

This next story should probably be filed under it is always good to question your priors. Two-thirds of Americans think all of those new data centers that are being built are going to increase electricity costs. That's from a Harvard poll last year. And, yeah, data centers use tons of power. And electricity prices are indeed up 39% nationally over the past five years. That's from the Bureau of Labor Statistics. But a study from the Electric Power Research Institute, that's an independent research group funded largely, though, by the electric power industry, It shows new data centers weren't the main cause of that increase and actually put downward pressure on electricity prices for now. Marketplace's Henry Epp makes it make sense.

Say you're throwing a party and you're buying a big spread of food for your guests, and you ask each of your guests to chip in an equal amount for their share of the food. Robin Milliken is with the Center on Global Energy Policy at Columbia University.

You know that your buffet is going to cost you $1,000, let's say. And if you have 10 people show up, you know, your cost is much higher per person.

$100 each. That's a pricey buffet. But then you find out your cousin and four of her friends are in town. They want to come to the party too. Five more guests and they'll pay their share. So the price per person of that buffet goes down for everybody to $66. To translate this to power prices and data centers, the buffet is the fixed cost of running the power grid, building and maintaining all the power plants, poles, wires, and substations. And your cousin and her friends, they're a new data center, hooking up to the grid.

You're taking the fixed costs of managing the grid, and you're able to essentially have more customers pay for those fixed costs.

This is how data centers pushed electricity prices down in recent years, according to a study released this spring by the Electric Power Research Institute. They helped spread out those fixed costs of providing electricity, says Asa Watton, the co-author of that study.

Average residential retail rates in the average state would have been about 6% higher without the data centers built from 2019 to 2024.

One big caveat there, it's a national average. In certain states, adding data centers has lowered electric bills, says Ryan Ledick at the consulting firm The Brattle Group.

Those states that have experienced those price decreases are states that already had room on their power grid to accommodate these new customers without needing to go out and make big investments in new infrastructure.

North Dakota is a good example, he says. It had an excess supply of electricity from coal, natural gas, and wind, bringing in large industrial customers, including data centers, lowered prices for residential customers. But in other regions that don't have much excess power supply, data centers have started to have the opposite effect.

If it's a utility or a system or a market that doesn't have that headroom, then it is possible that the data center is going to drive up electricity prices.

This is what's starting to happen in the Mid-Atlantic and parts of the Midwest, overseen by the grid operator PJM, Lettick says.

Demand has risen quickly, and there isn't enough generation capacity that's available to keep up with that demand.

Which is driving up costs for everyone. To go back to that party analogy, say the party's underway and your guests have eaten most of the food, but then another group of your friends shows up. They're hungry, so you have to go out and buy extra food for them, and all of your guests end up paying more. This is what utilities and policymakers are now grappling with as more data centers push up electricity demand. One way regulators are trying to handle this, by charging data centers a higher rate for electricity. Again, Robin Milliken at Columbia.

Essentially, state regulators are setting a different class of rates for data centers to have them bear the costs of things like new transmission lines, new substations that are required. in order to serve their new demand.

Historically, she says, big industrial customers have gotten lower electric rates to incentivize economic growth. But in many regions, that policy might not make sense anymore. I'm Henry App for Marketplace.

Coming up. I like doing unreasonable things. Well, that's one way to keep people on their toes. First, though, let's do the numbers. Dow Industrial's up 149. Today, three-tenths of one percent, finished at 52,637. The Nasdaq picked up 74 points, also three-tenths percent, 26,281. The S&P 500 up 31 points, four-tenths percent, 75.75. For the week, the Dow lost a half percent. The Nasdaq improved one and three quarters of one percent. The S&P 500 grew one and two tenths percent. Look out, Wall Street. Here comes Y'all Street. In Dallas today, the new Texas Stock Exchange began trading. The exchange opened with just a handful of securities, no corporate listings quite yet. What it does have, though, and this is nice to have, is millions in backing from some very big banks. JPMorgan Chase ticked up two tenths percent. Charles Schwab rose one and one tenth of one percent. Bonds fell, yield on the 10-year, T-note rose 4.55%. You're listening to Marketplace.

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is a paid advertisement. This is Marketplace. I'm Kai Rizdahl. If you're still looking to book that last-minute summer getaway, I mean, good luck finding a cheap plane ticket, right? Airfares are 26% higher than they were a year ago. That's what the most recent consumer price index tells us. And with the collapse of Spirit Airlines, there are indeed fewer options for budget fares. Not quite as expensive, though. Taking the bus. Jacob Passi wrote about how travelers are swapping airfares for bus tickets in the Wall Street Journal the other day. Jacob, thanks for being here.

Thanks for having me. Well, let's get down to brass tacks here. Have buses replaced, to some degree, low-cost airlines?

Yeah, we're definitely seeing that. Greyhound and Flix bus saw a pretty substantial uptick in demand when Spirit Airlines went under at the beginning of May. So just kind of one indication. And then I've talked to passengers who said, you know, they are taking the bus instead of flying because of cost and other concerns.

It is one thing to take a bus from, you know, I don't know, Washington, D.C. to Boston. Another thing to go Boston to L.A. on a bus. So it's not all air routes that are being covered here. Yeah, correct.

Correct. You're exactly right. Folks are going to replace flights with buses when it is kind of that medium distance, just a few hundred miles, any longer than that. And you're talking about multiple days on the bus, which I don't think many people can stomach.

I agree with that.

How much cheaper are we talking here? Oh, significantly cheaper. A bus trip, depending on when you book it, can set you back less than $50. The average fare paid by riders at Our Bus, which is another inner city bus line, was $36 in May. And that's actually down from last year. So while other forms of transportation this summer have gotten more expensive, bus travel has either stayed flat or actually gotten cheaper.

Wow. There is a certain, not to get all, you know, faux nostalgia about this, and maybe it's real nostalgia. I don't know. There's a certain See America part of being on a bus that you just don't get on a plane.

100%. I talked to a woman who, when she was planning a trip up the eastern seaboard, she lives in the Midwest, she chose to go by bus and train because she wanted to see the scenery, especially this summer with a lot of folks sort of celebrating America 250 and things like that. I think I think there is this, yeah, nostalgia factor around taking a bus to to see different parts of the country and actually see it along the way.

You've named a couple of three bus companies in this, you know, three minutes, four minutes we've been talking. I only recognize one of them. So I wonder if there is a and certainly this depends on on which part of the traveling public you're appealing to. But there's a there's a branding and advertising and marketing thing here that bus companies need to think about, too.

I totally agree. So obviously Greyhound is probably what most people are familiar with. And a lot of these companies are regional. And so that's another factor here. So like if you're in Florida, you might recognize a company called Red Coach. If you don't live in the southeast, you're not going to know that company. And that is definitely a challenge for the bus industry. I think a lot of people don't think of buses immediately and also have somewhat outdated ideas of what a bus trip is like.

Well, talk more about that. What is a bus trip like? Because true confessions, I haven't taken a long bus trip in a very long time.

Yeah, these days, buses are much more comfortable than they used to be. Some of them, most of them at this point have Wi-Fi and they're getting more reliable with their Wi-Fi. Some of them, you know, the more quote-unquote luxury bus lines have amenities like snacks and beverages and things like that, movies, kind of what you might expect from a flight. I was just going to say, it sounds a little bit like an airplane. Right. Yeah. Yeah. It doesn't get you from point A to point B quite as quickly, but you're not necessarily sacrificing comfort. And again, it can be a lot cheaper.

Right, right. OK, put up or shut up. You're the travel writer here. Are you all in on buses or where are you on this?

I think I'm with some other folks in that it depends on the trip. So my in-laws live in Portland, Maine, and flights there can be kind of pricey from New York where I live. And so there is a bus operator that has a very nice bus that I have taken before and continue to take from time to time. My in-laws take it to visit me. I would say, you know, if you if you need to go somewhere and the flights are just too pricey and you don't want to drive yourself, give the bus the try.

Give it a try. Jacob Passi at the Wall Street Journal. Jacob, thanks a lot. I appreciate your time. Thank you so much. Looking ahead to the plethora of economic data we are going to get next week, let me highlight in advance, as David Gerr did mere moments ago, Tuesday's Consumer Price Index, specifically the line item in Table 2 that is going to give us an update on prices for women and girls' apparel. The price of women's clothing is most certainly up by recent standards, It was about 12 percent higher than five years ago. But it's actually down if you take a longer view back to its peak in the 1990s. And we all know that globalization and mass production have driven clothing prices down. But just as a what if, what if you tried to make it yourself or grow it, maybe?

Here's today's installment of our series, My Economy.

My name is Eve Schaub, and I am growing a dress in my backyard. I like big projects. I like big ideas. Myself and my husband are here in Vermont, and I said, I've always wondered what it would be like to make a garment from the very beginning, and that is where the idea came from. last year in the spring i planted 600 square feet of flax seeds you wait three months 90 days pull them up by the roots and then begins the process called redding where you lay out all of the harvested flax stalks on your lawn and you let it get rained on and the stalks start to degrade And that's what you want, but you don't want it to degrade too much because then the fiber on the inside could be lost. Then we move on to the breaking, scutching, and hackling, which essentially removes all of that nasty outer coating that you don't need. Then you move on to the next step, which is spinning, or in my case, learning to spin. Ah! I will be weaving all of this now linen yarn into cloth and after that I'll have to cut it up and sew my dress. One of the big things that I've learned from this project is how precious people's cloth and clothing would have been to them prior to the industrial age. this material took so much labor now i walk into a department store and i am just i just see fast fashion i don't i don't want to participate that any more than i absolutely have to but at the same time i also understand we're not going to all go out and plant 600 square feet of flax in our backyard. That's not reasonable. But I like doing unreasonable things. It's part of my curious slash stubborn nature. I have clothes. I don't need this dress to add to my wardrobe, but I have no doubt that when it is done, it will become the prized possession of my wardrobe because it will have so

much of me in it. Eve Schaub, making a dress, growing one, actually, in Paulette, Vermont. You want to see what that might look like? Instagram, YouTube, TikTok, that's where you can find her. Us too, if you're looking. And if you get a minute, do us a favor, would you tell us about your economic experiments? There's a place you can do that at marketplace.org. This final note on the way out today, in which both the 30-year fixed rate mortgage and Article 1, Section 7, Clause 2 of the Constitution of the United States make an appearance. The 30-year fixed, Freddie Mac says, sits today at 6.49 percent. Also and related, that bipartisan housing bill is wrapping up its 10th day, excluding Sundays, sitting on the president's desk waiting for his signature, which he has not said he will do. If he doesn't veto it by midnight, the aforementioned Article 1, Section 7, Close 2, says it becomes law anyway. Our theme music was composed by B.J. Liederman, Marketplace's executive producer, is Nancy Fargali. Joanne Griffith is the chief content officer. Neil Scarborough is the vice president and general manager. And I'm Kai Rizdahl. Have yourselves a great weekend, everybody. We will see you back here on Monday, all right? This is APM.

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